In February I made a projection for housing stating that “by June 2015 the housing numbers will take a setback.” On Friday June 12th Alan Greenspan said in an interview ” We haven’t come out of the bottom of the housing collapse, we are in a secular stagnation.” The problem for many homeowners is the lack of equity. Many homeowners still owe more on their home than their original mortgage. Homeowners are either stuck, or feel intuitively, a desire to stay put and not take on additional debt. The lack of inventory in many markets is causing housing prices to climb. This is a double edge sword as borrowers can’t afford the rising home costs and homeowners don’t want to budge and list their home if there are so few choices. This trend will likely continue through 2016.

Bonds

We are entering a more critical time for the bond market towards the end of June. Saturn will enter Scorpio again on June 14th, suggesting a final opportunity to restructure banking debts from bond deals that went sour, most likely the bond bets from the Greek deal that blew-up when MF Global went bankrupt in October 2011. The Fed will have until September 17th to get it done. The outcome is going to bring more bearish volatility in the Fall for bonds and stocks.

June 10th- June 22nd: Next week could see liquidity from a powerful banking source, potentially Japan’s central bank, pumping money into Treasuries and the markets. This could bring a bounce for bonds next week, however, June 24th is punctuated as a volatile reversal of these efforts. Last week I highlighted August 4th as a critical date. Although the dollar has been quite strong, we may see a reversal for the dollar near August 4th. Currency volatility will likely increase as well. Bond and currency volatility June 24th and into the first week of August is very likely.

I am advising caution in all areas. Usually a market decline brings flows into bonds. The reverse will likely happen in coming months. Market mechanisms have been so manipulated that faith is slowly eroding within all asset classes.

The End of The Federal Reserve

While the Federal Reserve has been busy dissolving itself through failed economic policies, China and Russia are forging ahead with the development of the New Silk Road. The backbone of the system linking China to Russia will be an interconnected network of high speed railways set to open up the territories to transport, migration, agriculture, commerce, and industries making Euroasia the pivotal land mass of the world. Sir Halford Mackinder predicted in 1904 that the vast resources of the Euroasian heartland could quite possibly become the new empire of the world.

It could, and if there is a threat to the establishment of the Federal Reserve it is possibly with Euroasia. In October 2014 China announced its plans for the Asian Infrastructure Investment Bank. China’s leadership sees this institution as a future regional and, in the end, Euroasian alternative to the U.S.-dominated World Bank. China has held an open invitation to the U.S. to join its sponsored Asian bank, as a founding governing board member, however the U.S. has declined. There are many scholars who claim the New Silk Road is the first shot in a competition for world dominance. The threat to the Clinton Cartel is real–George Soros is among the loudest critics suggesting a new cold war and alarming claims of an imminent nuclear war between the U.S. and China.

While the U.S. and the Federal Reserve continue to pursue endless wars, the world is moving forward into a new age, with or without them.

The Markets

We continue to see a tight range bound trend in the markets. Again, next week could bring a bullish move with manipulation coming from a central bank. The move will likely not last, and in keeping with the recent past, reverse just as quickly. The is a banking problem-debt/insolvency problem- that has a few months yet to be reconciled. Now is a time to continue to stay in a strong cash position. We are watching our TLT position for an exit in the near future.